An economy with no government is described by the following: • Marginal propensity to consumer = 0.8 • Marginal propensity to import = 0.2 • Autonomous expenditure = 500 • Potential GDP = 1500 1. The aggregate expenditure function is thus AE 500 0.6 2. The multiplier is 1 3. Equilibrium GDP is Y 1250 %3D 4. The output gap is 5. There is a output gap.

An economy with no government is described by the following: • Marginal propensity to consumer = 0.8 • Marginal propensity to import = 0.2 • Autonomous expenditure = 500 • Potential GDP = 1500 1. The aggregate expenditure function is thus AE 500 0.6 2. The multiplier is 1 3. Equilibrium GDP is Y 1250 %3D 4. The output gap is 5. There is a output gap.

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter19: The Keynesian Model In Action

Section: Chapter Questions

Problem 5SQP

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